Is Govt planning to Charge a fee for UPI Payments? - Here’s All You Need to Know

UPI Payment Charges Latest News: RBI released a discussion paper in which the central bank proposed introducing charges for UPI Transactions which are currently completely non-chargeable and free. The discussion paper released by RBI on 17th August was based on levying charges in payment systems, including the UPI, NEFT and IMPS. The paper while discussing various aspects related to digital payments and the costs involved, tried to initiate a general discussion to generate ideas to help firms providing UPI services recover their operational costs.

Why RBI has proposed making UPI Payments Chargeable?

 As part of the proposal discussion, the Central Bank’s Paper had also recommended using levying a charge as low as one or two paise per transaction. The paper also elaborated on the need of making UPI Payments chargeable to provide an optimal revenue stream for the intermediaries. The paper also proposed that as UPI transactions are essentially the same as IMPS (Instant Payment Service), they should also carry the same fee as well. Apart from UPI transactions, the central bank’s paper also intends to impose a fee on debit card transactions.

While making these proposals, the paper has also invited feedback from the citizens on the following questions:

• In the context of zero charges, is subsidising costs a more effective alternative?
• If UPI transactions are charged, should MDR for them be a percentage of transaction value or should a fixed amount irrespective of the transaction value be levied?
• If charges are introduced, should they be administered (say, by RBI) or be market determined?

Is Govt Planning to make UPI Payments Chargeable?

The simple or one-word answer to this question is ‘No’. As of now, the Central Government has not issued any notification which would imply that it is planning to make UPI Payments Chargeable for the citizens. In fact, on Sunday - 21st August 2022, following the RBI’s discussion paper created a ruffle among netizens, the Ministry of Finance quickly issued a clarification in this regard. Sharing a tweet from its official account, the Finance Ministry noted that the Government is not going to levy any charges on the digital mode of payment UPI. It further stated that UPI is a public good and provides citizens with a safe, transparent and convenient way of carrying out digital transactions.

UPI is a digital public good with immense convenience for the public & productivity gains for the economy. There is no consideration in Govt to levy any charges for UPI services. The concerns of the service providers for cost recovery have to be met through other means. (1/2)

— Ministry of Finance (@FinMinIndia) August 21, 2022

Issuing a clarification regarding the Discussion Paper Floated by RBI with regards to the UPI Payments being made chargeable, Finance Ministry noted that the concerns shared by the central bank about the cost recovery for service providers will have to be managed through other means. The ministry also added that it is has provided and will continue to provide financial support for the digital payment ecosystem. The government fully support digital payment and they will further promote the mode so that people can adopt it.